China’s central bank to maintain prudent monetary policy

China’s central bank has said it will continue to maintain a prudent monetary policy this year to create a sound financial environment and keep liquidity at a reasonable level.

A combination of flexible tools will be used to ensure the banking sector’s liquidity stays at a reasonably abundant level, the People’s Bank of China (PBOC) said in a statement released on Jan 8 after a work conference.

The central bank will support commercial banks expand lending to key sectors and weak areas of the economy via multiples tools, including pledged supplementary lending and medium-term lending facility, according to the statement.

The PBOC will push for continued optimization of credit structure to make the financial sector support growth of the real economy.

It will also continue to make interest rates more market-based and improve the exchange rate formation mechanism to ensure a generally steady rate for the yuan, the statement said.